The rupee weakened by 28 paise to close at 88.13 (provisional) against the US dollar on Thursday, influenced by a hawkish stance from the Federal Reserve and a rebound in the dollar’s strength.
Forex traders noted that market participants were evaluating the Federal Reserve’s outlook following its recent rate decision. The Fed cut rates by a quarter point as anticipated and indicated a potential for further gradual reductions in borrowing costs throughout the year.
Concerns over US tariffs on India and uncertainties in global trade also contributed to pressure on the rupee. Additionally, ongoing foreign fund outflows adversely affected investor sentiment.
In the interbank foreign exchange market, the rupee opened at 87.93 against the dollar, reaching an intra-day low of 88.16 before concluding the session at 88.13 (provisional), 28 paise lower than its previous close. On Wednesday, the rupee had appreciated by 24 paise, finishing at 87.85 against the dollar.
“The Indian rupee declined sharply in light of the hawkish Fed and the resurgence of the US dollar,” stated Anuj Choudhary, Research Analyst at Mirae Asset ShareKhan. “The Fed cut interest rates by 25 basis points as expected and anticipates two more 25 basis point cuts in 2025, with one in 2026. Fed Chair Jerome Powell expressed no significant concern about elevated financial risks related to tariffs, but raised caution regarding the labor market and GDP growth.”
Choudhary also mentioned that positive trends in domestic markets and potential foreign institutional investor inflows could provide support for the rupee. However, any recovery in the US dollar or US Treasury yields might restrict substantial gains.
The dollar index, which measures the greenback’s performance against a basket of six currencies, increased by 0.02 percent to 96.89. Meanwhile, Brent crude oil, a global benchmark, was trading 0.43 percent lower at $67.66 per barrel.
On the domestic equity market, the Sensex rose by 320.25 points to close at 83,013.96, while the Nifty gained 93.35 points, ending at 25,423.60. Foreign Institutional Investors sold stocks worth ₹1,124.54 crore on a net basis on Wednesday, according to exchange data.
In related news, Commerce Minister Piyush Goyal expressed optimism regarding India’s export growth, projecting an increase of approximately 6 percent this year compared to the same period in 2024. Highlighting the country’s robust performance in global trade despite ongoing challenges, Goyal noted that negotiations on Free Trade Agreements (FTAs) were progressing with several nations. “I believe we will end the year on a positive note,” he stated, emphasizing the optimism surrounding India’s export sector.
Published on September 18, 2025.
